Tips for Better Supply Chain Management in the Pharmaceutical Industry


In the last two decades, the growth of the pharmaceutical industry has increased sixfold from i-e 113 billion dollars in revenue in 2000 to 629 billion dollars in 2019. With growth comes complexities. Over the past few years, pharmaceutical supply chains have become more global, complex and cloudy. Companies have started outsourcing to contract organizations, new treatments and therapies are being added and unique ways of reaching the patients are being explored today. According to a Mckinsey survey, supply chain risk is a major threat to pharmaceutical industry disruption. Let’s explore some ways to make the supply chain better and more resilient.

1. Transparency:

Pharmaceutical companies need to trace their supply chain from one end to another. Every supplier and supplier’s supplier should be known. The transparency in cold chain supply management makes it easier to detect any discrepancies that might occur. Moreover, it can salvage the company’s reputation if some suppliers are involved in unjust labour practices along the supply chain. End-to-end knowledge of the supply chain also helps in understanding the vulnerabilities of the system. Any small disruption can halt a whole operation. For example, a malfunctioning supply vehicle will delay the whole process. The exact knowledge of what is happening at each step of the supply chain requires an in-depth knowledge of finances, data security, regulations, operations, organizational maturity and structure of the supply chain. To obtain complete knowledge of supply chain technology or third-party organizations can be used.

2. Reassessment and Stress Testing:

To pinpoint the possible weak joints and vulnerabilities, most companies imagine stress-causing scenarios and assess the current condition of the company’s resilience against the consequences of that stressful situation. It helps the company to prepare itself against any number of calamities by already forming a management plan against similar conditions. The same goes for supply chain management. The companies should anticipate most probably occurring scenarios of chain disruption and build plans to deal with similar situations if they arise. It helps in time efficiency during an actual disruption.

3. Expansion:

To make the supply chain more resilient, a pharmaceutical company should increase the number of suppliers. Getting raw materials or products from a single source makes the company dependent on it and if any disruptions happen in that one supplier, the company faces a serious setback. It can be prevented easily. In addition to multiple sources, a pharmaceutical company should also have a “just-in-case” inventory for emergencies. The inventory will keep the work running for some time if any mishap befalls the supply chain. Component rerouting and flex production also help in keeping the production going in case of any trouble. But it requires a very advanced and developed analytical system to explore various scenarios. 

4. Executive Agenda:

Supply chain resilience is an unignorable necessity of the present times. So, it must be put on the executive agenda of the company. It should be embedded in the company’s strategic planning and day-to-day management. It can be done in two ways

  • Create a risk assessing committee which analyzes the supply chain management and risks.
  • Embed supply chain resilience in existing forums i-e already existing committee factors in supply chain assessment and challenges while managing day-to-day work.

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